Ch 03: Assipniment - Analysis of Arancial Statements 6. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset: management ratios, and debt manegement ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Blur Corp. and make comments on its second-year performance as compared to its first-year performance. The following shows biur Corpl's income statement for the fast two years. The company had assets of $10,575 milion in the first year and $16,916 million in the second year. Common equity was equal to $5,625 million in the first year, and the compary distributed 100% of its earnings out as dividends ducing the first and the second years. In addition, the firm did not issue new stock during eizher yeac. Blur Corp. Income-Statement For the Year Ending on December 31 (Multions of dollars) Calculate the profitability ratios of Blur Corp, in the following tabie. Convert all calculations to a peroentage rounded to two decmal places: Decision makers and analysts look deeply into profitability ratios to identify trends in a compaay? profitability Profitablity retios give insights into both the survivabilizy of a compary and the benefits that shareholders recelve. Identify which of the following statements are true about. profitablity ratios, Check all that apply. A higher operating margin than the industry average indicates either lower operating costs, higher product pricing, or both. If a compary's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in a company's eamings means that the net profit margin is increasing. If a company issues new common thares but its net income does not increase; return on common equity will increase